The ability to use hESCs in directed differentiation protocols allows scientists to investigate mechanisms of human embryonic differentiation that were not previously possible. The ability to use embryonic stem cells to examine the effect of nicotine on the earliest stages of lung organogenesis is a unique and emerging opportunity. This proposal uses embryonic stem cells in directed differentiation protocols to determine if suppression of N-myc levels is a mechanism of action for nicotine exposure during embryonic and fetal lung development. Our hypothesis is that N-myc exposure is essential for normal differentiation of human embryonic stem cells into functional lung epithelium and fibroblasts in vitro, and that nicotine prevents normal differentiation into lung in vitro and in vivo by inhibiting the N-myc signaling pathway. Building on our preliminary data, this proposal will provide a mechanism for the decreased lung function seen in infants born to smoking mothers, and be used to guide the development of new interventions to improve the lung health of infants and children. This hypothesis will be tested in translational research using two specific aims: 1) To determine if knock-down of N-myc in human embryonic stem cells during directed differentiation into lung epithelium and fibroblasts leads to altered gene expression patterns, imbalanced rates of proliferation and apoptosis, and an inability to form a functional epithelium in vitro. 2) To determine if exposure to nicotine during differentiation into lung epithelium and fibroblasts leads to decreased N-myc expression, resulting in altered gene expression patterns, and abnormal rates of proliferation and apoptosis, resulting in the inability to form a functional epithelium. This aim will also determine if restoring N-myc expression during differentiation in the presence of nicotine prevents nicotinic effects. Effects of nicotine in vitro will be confirmed using a murine explant model of in vivo lung development.